EXHIBIT 10.12
EMPLOYMENT AGREEMENT
The following sets forth the Agreement by and between Xxxxxxx X. Xxxxxx
("Employee") and Data Return Corporation ("Company"):
1. Position and Duties. Director of Sales reporting to the Vice President of
Marketing, Sales and Business Development. This senior management position
shall be responsible for directing a sales organization where skills in the
development and execution of sales strategies, strategic planning and
business fundamentals will drive the attainment of profitable order input,
order fulfillment, revenue recognition, and a high level of customer
satisfaction. Future duties will be of comparable or higher responsibility
and status relative to initial position.
2. Start Date. Employee shall begin his position and performance of duties with
Company on or before May 31, 1999.
3. Salary. Employee shall receive a base salary of $130,000 per year, paid in
accordance with Company's usual practice, subject to annual increases based
primarily on performance with consideration given to inflation. Employee
shall be paid commissions based on quotas set to the Company's annual revenue
objective. Commissions will be set so that earnings at 100% of quota equal
$20,000 for a total targeted compensation of $150,000 per year.
4. Equity. Employee shall be granted 2,000 Stock Options based on 105,000
outstanding shares. These options will vest over four years, at the rate of
25% per year. If an IPO or change of control precedes full vesting, 50% of
the unvested portion will be vested at IPO or change of control and the
balance will be vested one year after IPO or change of control The strike
price will be $50.00 per share. Other discretionary grants or options may be
awarded in a consistent manner with other senior managers.
5. Relocation. Company will pay relocation costs up to $20,000 associated with
Employee's relocation from California to Texas. These costs may include
expenses associated with 2 house hunting trips, realty fees, legal and dosing
cost, and all moving, traveling and temporary housing expenses.
6. Vacation. Employee will be granted 3 weeks of vacation per year for the first
three years and 4 weeks per year beginning in the fourth year.
7. Benefits. During the term of employment, Employee shall be eligible to
participate in all Company Medical, Dental, Life Insurance and Pension Plans
in accordance with current policy.
8. Term. The term of this Agreement shall commence on March 31, 1999 and shall
continue in effect as to Employee until March 31, 2004 or until such time as
terminated as provided in paragraph 9, 10, 11, 12 and 13.
9. Termination upon Death. In the event of the death of Employee, the employment
of, and this Agreement with respect to, such deceased Employee shall be
terminated; provided that any accrued salary, any accrued guaranteed minimum
bonuses and vested stock options as of the date of termination shall be paid
to the legal representative of Employee's estate.
10. Termination for Disability. Company may terminate Employee's employment
should Employee become disabled, including disability by reason of any
emotional or mental disorders, physical diseases or injuries, and as a
result of such disability Employee is unable to work on a full-time basis
for a continuous period of six months or more or any six months in a twelve
month period. Upon such termination any accrued salary, any accrued
guaranteed minimum bonuses and vested stock options as of the date of
termination shall be paid to Employee.
11. Termination for Cause. Defined as indictment or conviction of a felony or
negligent conduct or violation of company policy or poor performance causing
material harm to the Company. Termination for Cause shall be done in writing
accompanied by a written statement of the reasons. Prior written warning
with a
minimum of 90 days opportunity for corrective action is required before
termination for violation of company policy or poor performance.
12. Termination Other than for Cause. Company retains the right to terminate
this Agreement and/or Employee's employment at any time for any reason other
than cause. In such event Employee shall have the right to immediately
exercise all vested stocks and options or Employee may defer exercising the
vested stocks and options for a period of up to 12 months from date of
termination. Additionally, 50% of all granted but not yet vested options
will become immediately vested and exercisable. Furthermore, Company agrees
to pay Employee an amount equal to his monthly base salary for 12 months as
severance pay. Employee shall continue to participate as an employee in the
Company's medical, dental and life insurance plans for the same period as
the severance period.
13. Termination following a Change in Control. Should a change in control of the
Company take place, Employee shall be provided with severance pay and the
continuation of certain benefits upon an involuntary or constructive
termination of the Employee's employment within two years following the
occurrence of a change in control Specifically, Employee shall be entitled
to the following: the immediate vesting of all granted stock immediate
exercisability of all options or Employee may defer exercising the vested
stocks and options for a period of up to 12 months from date of termination
immediate payment of all performance contingent sums under incentive
programs; and immediate vesting of pension benefits. Furthermore, Company
agrees to pay Employee an amount equal to his monthly base salary for 12
months as severance pay. Employee shall continue to participate as an
employee in the Company's medical, dental and life insurance plans for the
same period as the severance period.
14. Noncompetition
Employee agrees to not compete with the Company during the term of the
employment.
a. Employee agrees to not compete with the Company for a period of one year
following the date of resignation or Termination for Cause.
b. At the Company's option, Employee agrees to not compete with the Company
for a period of one year following the date of Termination for Convenience,
provided that the Company pays the employee an amount equal to the
employee's prior year's annual income, including salary and bonus, such
amount to be paid on a bi-monthly basis.
1. Change, Modification and Waiver. No change or modification of this Agreement
shall be valid unless it is in writing and signed by Employee and Chairman
or CEO of Company. No waiver of any provision of this Agreement shall be
valid unless it is in writing and signed by the party against whom the
waiver is sought to be enforced. The failure of a party to insist upon
strict performance of any provision of this Agreement in any one or more
instances shall not be construed as a waiver or relinquishment of the right
to insist upon strict compliance with such provision in the future.
2. Notices. Any notice required or permitted to be given under this Agreement
shall be deemed delivered when given by registered or certified mail
addressed to the party to whom such notice is being given. The addresses of
the parties, which may be changed from time to time in writing, are as
follows:
Employee Company
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Xxxxxxx X. Xxxxxx Data Return Corporation
0 Xxxxxxxxx Xxxx 000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxx xx Xxxx, XX 00000 Xxxxxxxxx, XX 00000
3. Governing Law of this Agreement. The validity of this Agreement and the
interpretation and performance of all its terms shall be governed
exclusively by the laws of the State of Texas.
4. Entire Agreement. This Agreement constitutes the entire agreement between
the Company and Employee. Each party has carefully read this Agreement,
understands all of its provisions, and freely and voluntarily enters into
it.
IN WITNESS whereof the parties have affixed their signatures below this 18th
day of March, 1999.
Data Return Corporation Xxxxxxx X. Xxxxxx
By: /s/ Sunny X. Xxxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
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Its: Chairman and CEO
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